Macy's plummets to its lowest level in 9 years after slashing its profit forecast
- Macy's tumbled to its lowest intraday levels since 2010 after missing second-quarter estimates and lowering its 2019 profit expectations.
- The retail giant's CEO attributed the loss to rising inventory and a markdown related to clearing spring stock before fall products hit shelves.
- The chain's revised annual expectations don't take the next set of US tariffs into account. Macy's is evaluating the trade war's financial impact after some of the new tariffs against China were delayed Tuesday.
- Watch Macy's trade live here.
Macy's plunged as much as 18% in early trading on Wednesday after reporting second-quarter earnings that fell short of analyst estimates. The department store also cut its full-year profit projections.
The share losses marked the lowest intraday levels since 2000 for Macy's. The company's CEO cited inventory as a primary hit against its bottom line, and announced Macy's took markdowns to clear its spring inventory before fall products hit shelves.
"We had a slow start to the quarter and finished below our expectations," CEO Jeff Gennette said. "Rising inventory levels became a challenge based on a combination of factors: a fashion miss in our key women's sportswear private brands, slow sell-through of warm weather apparel and the accelerated decline in international tourism."
Here are the key numbers:
Adjusted earnings per share: $0.28, versus the $0.45 estimate
Revenue: $5.55 billion, versus the $5.56 billion estimate
2019 adjusted earnings per share guidance: $2.85 to $3.05, versus the previous expectation of $3.05 to $3.25
The company reaffirmed its previous estimates for yearly sales expectations.
Macy's noted that its revised guidance doesn't take the next set of US tariffs on Chinese goods into account. The company is evaluating the impact tariffs will have on its bottom line after the US announced it will delay part of the duties, originally expected to hit in September.
Competitors Nordstrom and Kohl's also fell on the news, both trading about 5% lower.
Macy's was down roughly 35% year-to-date through Tuesday.
The company has three "buy" ratings, 10 "hold" ratings, and four "sell" ratings from analysts, with a consensus price target of $23.17, according to Bloomberg data.
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